Indian QSR industry to touch $2 billion by 2016-17

CRISIL Research estimates show India’s organised quick service restaurant (QSR) market size to be worth Rs 58 billion in 2013-14. The industry is expected to grow at 26 per cent CAGR (Compound Annual Growth Rate) over the next three years to Rs 117 billion by 2016-17. Nevertheless, its share will remain a miniscule 2-3 per cent in comparison to the overall domestic food services industry. [National Restaurant Association of India estimates the size of the domestic food services industry (organised and unorganised) at Rs 2,476 billion in 2013, and projects about 11 per cent annual growth to Rs 4,080 billion by 2018].

Growth of QSR industry
Growth to be driven by outlet expansions
The QSR industry’s growth over the next three years will be primarily propelled by an average 16-18 per cent growth in store additions. During this period, same-store sales growth will be muted, averaging 6-8 per cent (significantly lower than 12-15 per cent average of last three years). We expect same-store sales to remain lower in the near-term but pick up later.

Established players are expected to account for about two-thirds of store additions. Among the established QSR chains, foreign players, namely Domino’s Pizza, Subway, McDonald’s, KFC and Pizza Hut, are together expected to comprise about 40 per cent of overall store additions. The contribution of relatively new entrants will also be significant at over 30 per cent share; brands such as Dunkin Donuts and Krispy Kreme that have entered the market in the past two years are expected to rapidly expand their store network. Players such as Burger King, Wendy's and Johnny Rockets are slated to enter the market as well.

In the case of same-store sales, growth will largely be from price hikes; QSRs have been raising prices by 5-6 per cent annually. However, average transactions per outlet will stay relatively flat mainly due to a more mature store profile (stores operating for over two years) for the bigger brands and higher competition. New entrants, though, could see an increase in transactions per outlet.

Same-store sales growth to pick up; historical levels unlikely
Same-store sales growth, which was robust at 20-25 per cent in 2010-11 and 2011-12, plummeted in 2012-13 and 2013-14. Cannibalisation due to opening of multiple outlets in the same catchment area, stiff competition, and economic slowdown leading to decline in discretionary spending, coupled with high food inflation, impacted same-store sales. Same-store sales of both Jubilant FoodWorks (master franchisee for Dominos and Dunkin Donuts in India) and Hardcastle Restaurants (franchisee for McDonald’s in the south and west) edged lower by 2 per cent and 9 per cent, respectively, in the first quarter of 2014-15 compared to growth rates of 25-30 per cent in 2011-12. Yum Restaurants India divisions’ same-store sales dipped by 4 per cent during the July-September 2014 quarter.

Same-store sales of Dominos and McDonald's declining
CRISIL Research expects same-store sales to gradually pick up, aided by improvement in discretionary spending triggered by economic recovery: after a sub-5 per cent growth rate for two consecutive years, the Indian economy is expected to pick up in 2014-15 and 2015-16. 

However, same-store sales growth will not rebound to historic levels of 20-25 per cent because of increasing competition and cannibalisation, especially in metros and tier I cities. Also, a mature store profile will limit any sharp improvement in same-store sales growth for the established brands - close to two-thirds of the total stores for larger brands such as McDonald’s and Domino’s are more than two years old. Hence, large QSR chains have been gradually moving to tier II and III cities, where competition is limited.

Foreign brands to maintain dominant position
Foreign brands dominate the QSR industry with over 60 per cent market share (in terms of number of outlets). In terms of value, the market share of foreign brands is higher vis-à-vis domestic brands as most have better average transaction size as well as number of transactions per outlet. The strong brand image and larger store area allows foreign brands to cater to larger number of customers.

Riding on the success of these international brands, the Indian market also witnessed the emergence of domestic brands such as Jumbo King, Goli Vadapav, Faaso's, Kaati Zone, Yo! China and Smokin’ Joes. However, most domestic players have been struggling to adapt to the quick service format.

Over the next three years, CRISIL Research does not expect a drastic change in the ratio of Indian and foreign QSR brands.

Foreign brands have been successful in tier I cities and are now expanding rapidly into tier II cities. These brands typically operate through the franchise model, which is an efficient way to scale up operations as it reduces capital burden.

By contrast, Indian brands are finding it difficult to scale up operations. Over the last two years, store additions of Indian brands were a mere one-tenth that of foreign brands. Some Indian brands such as Fasoo's revamped their strategy to achieve scalability. Indian players need to build their brand image; one of the tools to do this is by ensuring standardisation across product offerings by efficiently managing the logistics chain.

Foreign cuisines more adaptable to QSR format
Foreign cuisines have a dominant share of the QSR market due to easier adaptability to the cold storage format and their quick-to-serve nature; pizzas, burgers and sandwiches account for about 85 per cent of the total market size in value terms. Indian food, which is prepared through complex processes using several ingredients, is difficult to translate into an assembly line production model. However, domestic players such as Goli Vada Pav and JumboKing are trying to adopt the successfully implemented cold storage model to their domestic cuisines.


Market share break-up based on cuisines 2013-14E (value terms)
Interestingly, many players are also adding new products to their menus. A case in point is Domino’s Pizza, which launched wraps in May 2014. McDonald’s also now offers wraps. At Pizza Hut, non-pizza menu comprises about 50 per cent of the menu.

Severe competition in QSR especially in metros / tier I cities
The Indian QSR market is highly competitive where players compete through core offerings and product variations not just among the organised segment but also among the huge unorganised market. Customers now even have various options and preferences to choose from.  

The degree of competition can be understood by the fact that the same brand has multiple stores catering to the same micromarket, in addition to the presence of other QSR brands serving similar food. One such instance is the presence of two stores of the same brand in a single mall, one for dine-in and the other for delivery.

Competition in the burger segment will also increase with large global players, namely Burger King, Fatburger, Wendys and Johnny Rockets, expected to enter the market. Johnny Rockets recently opened an outlet in Delhi and Gurgaon. The US burger chain, Burger King, plans to open stores in Mumbai and Delhi this year through the franchisee route. American burger chain, Fatburger, has appointed Vazz Foods as its master franchise in India.

In the donuts segment, Mad over Donuts was enjoying a near monopoly in India since its entry in 2008. However, the entry of Dunkin Donuts and Krispy Kreme has increased competition within this category as well. Dunkin Donuts, which sells burgers and donuts, entered India in January 2013. Krispy Kreme recently entered India through a franchise agreement with Citymax Hotels India Pvt. Ltd.

Foreign chains move towards tier II, III, new entrants - metros
Having set up operations in the metros, large chains such as Domino’s and McDonald’s are increasingly expanding their presence in tier II and III cities. Over the last one year, Domino’s strengthened its presence in cities such as Bhiwadi (Rajasthan), Korba (Chhattisgarh), Rajahmundry (Andhra Pradesh), Aligarh (Uttar Pradesh), Hoshiarpur (Punjab), Belgaum (Karnataka), Dharamshala (Himachal Pradesh) and Rangpo (Sikkim). Over the last one-and-a-half years, Hardcastle (McDonald’s) has opened outlets in tier II cities such as Coimbatore, Mysore, and Kochi in the south and Rajkot and Mehsana in the west.

Such expansions help utilisation of cheaper real estate in smaller cities, but also allow large chains enter relatively untapped markets. Opening outlets near highways allows the large chains to draw benefits from cheaper real estate and cater to customers who are constantly on the move. However, the relatively new entrants, especially the domestic QSR brands, will remain focussed on bigger cities to establish their presence and enhance brand recall.

Going forward, we expect QSR growth to be higher in tier II and III cities owing to the huge opportunity to expand in these markets. With metros already saturated, we expect major expansion to take place in tier II and III cities. As disposable incomes in semi-urban areas have increased and aspirations to experience brands have gained momentum, there is good potential in tier II and III cities. Hardcastle Restaurants, the master franchisee for western and southern India for McDonald’s, plans to invest about Rs 7 billion over the next five years to expand its restaurant network primarily focussing on tier II and III cities.

WHISKY - FAQ's VI

When was blending introduced?

Blending was pioneered by Andrew Usher in Edinburgh in the early 1860s. It was only after this practice became common that a taste for Scotch Whisky spread first to England and then throughout the world.

The reason for this was that Pot Still Malt Whisky was inclined to be too strongly flavoured for everyday drinking, especially by people in sedentary occupations and warm climates. By combining Malt Whisky with Grain Whisky, which has less pronounced characteristics, the demand for a whisky that is milder in flavour and more suited to the conditions of modern life can be met.

What is the percentage of Malt and Grain Whiskies in blended Scotch Whisky?

There is no fixed percentage and the proportion differs from one blender to another. No brand owner is willing to reveal the proportions of the different whiskies used, but the blender determines the proportion according to the character he is seeking for his blend. This character is determined not only by the proportions of Malt and Grain Whisky which it contains, but also by factors such as the ages of the individual whiskies and the manner in which they combine to bring out the finest qualities in each other.

What is a deluxe blended Scotch Whisky?

It is a blend which contains a higher proportion of carefully selected older and, therefore, more expensive whiskies. When there is an age label on a bottle of blended whisky, does it refer to the average age of the whiskies in that blend?
No. The law requires that when the age is declared on a label, it must refer to the youngest whisky in the blend.

For example, if a blend is described as an eight year old, the youngest whisky in that blend must have been matured for at least eight years.

Is it legal to sell whisky which is less than three years old for consumption in this country?

No. Although the spirit is distilled under the strict conditions applied to the production of Scotch Whisky, it is not entitled to be described as Scotch Whisky until it has matured for three years. This does not apply to compounded spirits such as gin, vodka and liqueurs.

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Making Whisky

The magical processes used to create whisky have not changed a great deal over the years. Some of the more traditional techniques have fallen by the wayside as distilleries introduce more efficient, modern apparatus but as other countries have found, it is impossible to create Scotch anywhere else in the world with even the most scientific methods at your disposal. Whether it is the water, geography, climate, techniques used or some form of combination of these, it's not known for sure. All we do know is that whatever it is, it works! The main rules that define what makes ‘Scotch whisky’ are as follows  - it must be made at a Scottish distillery using water and malted barley  - it must spend at least three years maturing in oak casks  - the whisky must be matured in Scotland   Ingredients  The main ingredients used in making whisky form a short list:   Water - most of Scotland's water is very soft. Soft water will absorb more from the malted barley used to make whisky, than hard water will, which might offer a reason as to why it seems to make a suitable ingredient for whisky. Some also believe that peaty water will have an influence on the whisky, helping to give a peaty flavour to the drink. Otherwise the different waters used by distilleries should not affect the finished product too much. The most important factor for the distillery is that they have a large supply of water.   Malt - malted barley, or malt, is always used for malt whisky, not surprisingly. In contrast, grain whiskies will use maize or other cereals. Malt is explained in more detail below.   Yeast - one of the less significant factors when it comes to the flavour of the whisky, but nevertheless a crucial element as the yeast is used to trigger the chemical process that converts sugars in the malted barley into alcohol.   Peat - peat is basically decayed vegetation that has not broken down in the soil due to poor drainage in the land. Cut from marshland bogs, it is used as fuel and in the case of whisky, as a fuel for halting the maturation process of the barley once it has begun to germinate. It adds a smoky flavour to whisky which is usually associated with the Island malts, particularly Islay whiskies, but is present in virtually all malts in varying degrees.    Malting  Once the barley has arrived at the distillery it is steeped in water to allow the germination process to begin. Shoots begin to grow from the grains of barley as a result. Before the germination can go too far and the barley grain begins to consume its own sugar in order to grow, it is heated to halt the process, by kilning the barley. It is at this stage that peat is used to introduce its flavour to greatest effect. Peat was traditionally the fuel used for drying and slightly cooking the malted barley in many parts of Scotland and is still used for the flavours it imparts.  Depending on whether a distillery is using traditional floor maltings where the germinating barley is spread thinly on the floor, or a more modern system such as a rotary drum which allows the barley to be aired and heated more uniformly, the malting process can take between 20 and 48 hours. From here the malt will be ground down, or milled, ready for mashing.    Mashing  Warm water is added to the milled, malted barley which is then fed into a large, circular vessel called a mash-tun to allow the mashing to take place. Mashing is the stage where the starches in the barley convert to sugars which will later be fermented into alcohol. The mash-tun will contain either mechanical rakes or rotating blades that stir the mash. Slots in the base of the mash-tun allow the now sugary liquid, called ‘wort’, to run off. The wort will be recycled through the mash-tun three or four times before moving onto to be allowed to ferment.    Fermentation  By this stage the liquid is ready for fermentation. In a wash-back the wort has yeast added to it to encourage the chemical reaction that converts the sugars to alcohol. Washbacks were traditionally made of wood, although some distilleries now use stainless steel. While more time consuming to clean out and less sterile, it is reckoned by some distillery managers that using wooden vessels does add to the flavour of the whisky.    Distillation  Scottish whisky distilleries use pot-stills to distill the spirit that will become whisky. Pot-stills, the copper icons of the whisky industry, offer a means of evaporating the alcohol, which turns to vapour before water does, which is then condensed and collected after escaping through the neck of the still. The exact shape of the still, its height, the shape and length of the neck, the fact that the still is made from copper rather than another metal, all play their part in making each whisky individual. The use of copper in making stills is crucial, as it’s only this metal that will remove some of the unwanted elements from the spirit – experiments with stainless steel have proved the importance of the metal used in the still. The liquid will typically be distilled twice, first in a larger ‘wash’ still, then in a ‘low wines’ or ‘spirit’ still in order to collect the ‘heart of the run’, the batch of spirit that the stillman knows will be suitable for maturing as whisky.    Maturation  Scotch whisky is always matured in oak casks. The exact type of wood used in the maturation stage and what the cask has been used for prior to being filled with whisky lends a great deal to the final flavour of the whisky when it is bottled. Oak is sourced from America and Spain – the right choice of oak being crucial. New oak is never used for maturing whisky as the wood will lend too much flavour to the spirit. For the majority of whiskies, casks that have been used for maturing bourbon are used. American law prevents bourbon producers from using casks twice, so after being used, a cask is of little use to the bourbon industry. The Scotch whisky industry benefits from this, with the practice guaranteeing a steady supply of ex-bourbon casks. Some distillers will use ex-sherry casks from Spain instead, perhaps the most famous being The Macallan, which uses ex-oloroso sherry casks.   While some whiskies spend their whole lives in the cask they were first poured into, some distilleries will use a second stage of maturation to add a different edge to the whisky. Glenmorange are one of the bigger producers of whisky that have done just this with their range of malts, which have Madeira, Port and Sherry finishes achieved by a maturation in a second barrel. Recent limited edition bottlings have also seen Malaga, Fino Sherry, Cognac, Bordeaux, Cote de Nuits finishes.   Just how long the whisky will mature before it is bottled is another complex question. Three years is the legal minimum but most will spend much longer, depending partly on how quickly the whisky 'grows up' which will vary from one whisky to the next. Over time, flavours from the environment that the distillery is in such as salty seaside air may offer its own particular effects. Some whisky will also be lost gradually through time as a very slow evaporation occurs through the pores of the wooden cask. Seeping out at a rate of roughly 1-2% a year, this loss is known as the 'angels share.' When the distillery sees fit, the whisky will be bottled. 

WHISKY - FAQ's V

THE MAKING OF GRAIN WHISKY

1. Scotch grain whisky is usually made from 10-20% malted barley and then other unmalted cereals such as maize or wheat. The starch in the non-malted cereals is released by pre-cooking and converted into fermentable sugars. The mashing and fermentation processes are similar to those used for malt whisky.

2. The wash is distilled in a continuous or Coffey still, named after its inventor Aeneas Coffey. It has two tall columns - a rectifier and an analyser. Cold wash is pumped in at the top of the rectifier and meets steam. The columns in fact act like a heat exchanger. The alcohol is cooled, condenses and flows away as Scotch grain spirit at about 94% alcohol by volume.

3. The distilled grain spirit is lighter in character and aroma than most malt whiskies and therefore requires rather less time to mature. The bulk of matured grain whisky is used for blending.

THE MATURATION PROCESS

While maturing, the whisky becomes smoother, gains flavour, and draws its golden colour from the cask. A proportion of the higher alcohols turn into esters and other complex compounds which subtly enhance each whisky's distinctive characteristics.

By law all Scotch whisky must be matured for at least 3 years, but most single malts lie in the wood for 8, 10, 12, 15 years or longer. Customs & Excise allow for a maximum of 2% of the whisky to evaporate from the cask each year - the Angels' Share. Unlike wine, whisky does not mature further once it is in the bottle.

THE ART OF BLENDING

While the distinctive single malts produced by individual distilleries are becoming increasingly popular, blending creates over 90% of the Scotch whisky enjoyed throughout the world.

By nosing samples in tulip-shaped glasses the blender selects from a wide palate - from the numerous Highland and Speyside malts to the strongly flavoured and peaty Island malts, and the softer and lighter Lowland malts. These malts are combined with grain whiskies - usually 60-80% grain whiskies to 20-40% malt whiskies, and are then left to 'marry' in casks before being bottled as one of the world-renowned blended whiskies.

A blend of a range of malt whiskies, with no grain whisky included, is known as a vatted malt.

The way we make Scotch whisky has evolved over several centuries, but the history of Scotch whisky embraces a much wider heritage; that of Scotland and its people.

What are the main kinds of Scotch Whisky?

There are two kinds of Scotch Whisky - Malt Whisky and Grain Whisky. The Malt Whiskies are divided into four groups according to the geographical location of the distilleries in which they are made, as follows:

(1) Lowland Malt Whiskies, made south of an imaginary line drawn from Dundee in the east to Greenock in the west.

(2) Highland Malt Whiskies, made north of that line.

(3) Speyside Malt Whiskies, from the valley of the River Spey. Although these whiskies come from within the area designated as Highland Malt Whiskies, the concentration of distilleries and the specific climatic conditions produce a whisky of an identifiable character and require a separate classification.

(4) Islay Malt Whiskies, from the island of Islay.

Each group has its own clearly defined characteristics, ranging from the lighter Lowland Malt Whiskies to those distilled on Islay which are generally regarded as the heaviest Malt Whiskies.

Malt Whiskies, which differ considerably in flavour according to the distillery from which they come, have a more pronounced bouquet and flavour than the Grain Whiskies. The production of Grain Whisky is not so influenced by geographical factors and it may be distilled anywhere in Scotland.

What gives Scotch Whisky its distinctive flavour and bouquet?

This is one of the mysteries of the industry and a secret which many imitators of Scotch Whisky have tried in vain to discover. Many theories and explanations have been put forward, but there is no universally accepted solution.

The distilling process itself is one factor. Scotch Whisky, after it has been distilled, contains not only ethyl alcohol and water but certain secondary constituents. The exact nature of these is not fully understood, but it is believed they include some of the essential oils from the malted barley and other cereals and substances that derive from the peat. The amount of these secondary constituents retained in the spirit depends upon the shape of the still and the way it is operated and also on the strength at which the spirit is drawn off. Grain Whisky, because of the process by which it is made, contains fewer secondary constituents than Malt Whisky and is accordingly milder in flavour and aroma.

The natural elements of water, peat and the Scottish climate all certainly have a profound effect on the flavour of Scotch Whisky. Water is probably the most important single factor and a source of good, soft water is essential to a distillery. Peat, which is used in the kiln or oven in which the malt is dried, also has an influence that can be detected in the ‘peaty’ or smoky flavour of many Scotch Whiskies.

The Scottish climate is extremely important, particularly when the whisky is maturing. At this stage the soft air permeates the casks and works on the whisky, eliminating harsher constituents to produce a mellow whisky.

Why do whiskies produced in different distilleries vary in flavour?

This again is a question which it is very difficult to answer with certainty. Most people would agree that the water used is the decisive factor. Adjoining distilleries which draw their water from different sources are known to produce whiskies that are quite dissimilar in flavour.

The size and shape of the stills are also important as are the skill and experience of the men who manage them. It is the objective of the distiller to produce a whisky whose flavour and character remain consistent at all times and in all circumstances. This is the true art of distilling, acquired only after many years and often handed down from one generation to the next.

How many distilleries are there?

There are around 100 Pot Still Malt distilleries and Grain, or Patent Still, distilleries in Scotland; but the number working can vary from year to year.

Can Scotch Whisky be made only in Scotland?

Yes. Many other products which were originally manufactured only in a particular locality have lost their geographical significance and can now be manufactured anywhere. The word ‘Scotch’, however, as applied to whisky, has retained its geographical significance. This is widely recognised in law throughout the world. Thus, whisky may be described as Scotch Whisky only if it has been wholly distilled and matured in Scotland for a minimum of 3 years.

If you could duplicate exactly a Scotch Whisky distillery in, say, Brazil or Spain, could you produce Scotch?

No. For the reason given in the preceding answer, whisky can be called ‘Scotch’ only if it is distilled and matured in Scotland. Whisky produced in Brazil is ‘Brazilian Whisky’ or in Spain ‘Spanish Whisky’. Attempts have been made to copy the unique flavour of Scotch Whiskies in many parts of the world, but with no success whatsoever.

What is blending? What is its purpose?

A number of distilleries bottle and sell some of the whisky they distil for consumption as single or unblended whiskies. By far the greater part of their production, however, is used for the well-known blended Scotch Whiskies that are sold all over the world.

Blending whisky is a considerable art acquired only after years of experience.

A blend will consist of anything from 15 to 50 different single whiskies, combined in the proportions of a formula that is the secret of the blending company concerned.

Whiskies from different distilleries have a character of their own and, just as people of different temperaments are often incompatible, so some whiskies will not blend happily with certain others. The Malts and Grains in a blend must therefore, be chosen to complement and enhance their respective flavours. Blending is in no sense a dilution. The blender's task is to combine different single whiskies, to produce a blend which brings out the best qualities of each of its constituent parts.

The aim of the blender is first to produce a whisky of a definite and recognisable character.

It is of the greatest importance that his blend should never vary from this standard, which his customers all over the world will have come to expect. His second aim is, therefore, to achieve consistency.

The blender must also decide when the different single whiskies are ready to be used in his blend. They are brought from the warehouse where they have been maturing to the blending establishment, where they are mixed together in a blending vat. They are usually returned to cask and left to ‘marry’ for a period of months, before bottling. Some companies prefer to vat their Malts and Grains separately and only bring the two together before bottling.

The combining of Malt with Malt or Grain with Grain is known as vatting. 

WHISKY - FAQ's IV

THE MAKING OF MALT WHISKY

The origins of malt whisky distilling in Scotland are lost in the mists of antiquity. They date back at least to the monks of the 15'" century and probably long before.

Although the distillers' art has been understood since earliest times, the subtle aromas and flavours of whisky have never been fully explained, even today. The ancient term using beatha, which is Gaelic for the Latin aqua vitae or 'water of life', was corrupted in the 18'" century to usky, and then to whisky. The following description is a generalisation of the process.

It should be remembered that each distillery has its own unique specifications.

1. Malting

Best quality barley is first steeped in water and then spread out on malting floors to germinate. It is turned regularly to prevent the build up of heat. Traditionally, this was done by tossing the barley into the air with wooden shovels in a malt barn adjacent to the kiln.

During this process enzymes are activated which convert the starch into sugar when mashing takes place. After 6 to 7 days of germination the barley, now called green malt, goes to the kiln for drying. This halts the germination. The heat is kept below 70°C so that the enzymes are not destroyed. Peat may be added to the fire to impart flavour from the smoke.

2. Mashing

The dried malt is ground into a coarse flour or grist, which is mixed with hot water in the mash tun. The water is added in 3 stages and gets hotter at each stage, starting around 67°C and rising to almost boiling point.

The quality of the pure Scottish water is important. The mash is stirred, helping to convert the starches to sugar. After mashing, the sweet sugary liquid is known as wort. The spent grains - the draff - is processed into cattle feed.

3. Fermentation

The wort is cooled to 20°C and pumped into washbacks, where yeast is added and fermentation begins. The living yeast feeds on the sugars, producing alcohol and small quantities of other compounds known as congeners, which contribute to the flavour of the whisky. Carbon dioxide is also produced and the wash froths violently. Revolving switchers cut the head to prevent it overflowing. After about 2 days the fermentation dies down and the wash contains 6-8% alcohol by volume.

4. Pot Stills

In some mysterious way the shape of the pot still affects the character of the individual malt whisky, and each distillery keeps its stills exactly the same over the years.

In distillation, the still is heated to just below the boiling point of water and the alcohol and other compounds vaporize and pass over the neck of the still into either a condenser or a worm - a large copper coil immersed in cold running water where the vapour is condensed into a liquid.

5. Distillation

The wash is distilled twice - first in the wash still, to separate the alcohol from the water, yeast and residue called pot ale - the solids of which are also saved for use in animal feeds.

The distillate from the wash still, known as low wines, and containing about 20% alcohol by volume, then goes to the spirit still for the second distillation. The more volatile compounds which distil off first - the foreshots, and the final runnings called feints where more oily compounds are vaporized, are both channelled off to be redistilled when mixed with the low wines in the next batch.

Only the pure centre cut, or heart of the run, which is about 68% alcohol by volume is collected in the spirit receiver.

6. Spirit Safe

All the distillates pass through the spirit safe - whose locks were traditionally controlled by the Customs & Excise. The stillman uses all his years of experience to test and judge the various distillates without being able to come into physical contact with the spirit.

The newly distilled, colourless, fiery spirit reduced to maturing strength, 63% alcohol by volume, is filled into oak casks which may have previously contained Scotch whisky, bourbon or sherry, and the maturation process begins. 

WHISKY - FAQ's III

What are the principal by-products of Scotch Whisky?

The liquids and solids remaining after distillation are not wasted, nor are they allowed to pollute rivers or coastlines. In recent years the Scotch Whisky industry has invested heavily in developing methods of treating the residue of distillation so that it now makes an important contribution to the animal foodstuffs industry.
Most distilleries now possess by-products plants or, in the case of smaller distilleries in remote areas, send their waste material to the area plants which process it into dark grains. These are extremely rich in protein and are sold in palletised form to farmers who use them to enrich cattle food.

Grain Whisky distilleries usually recover the carbon dioxide produced during the fermentation stage. This has several applications in industry and in the production of soft drinks.

What is meant by Under Bond and Duty Paid sales, respectively?

(a) Sales Under Bond are sales on which the Excise Duty has not been paid. The goods are consigned to a bonded duty-free warehouse.
(b) Sales Duty Paid are sales on which the Excise Duty has already been paid.

What is the origin of the name 'whisky'?

The term ‘whisky’ derives originally from the Gaelic ‘uisge beatha’, or ‘usquebaugh’, meaning ‘water of life’. Gaelic is that branch of Celtic spoken in the Highlands of Scotland.

When was Scotch Whisky first distilled?

Whisky has been distilled in Scotland for hundreds of years. There is some evidence to show that the art of distilling could have been brought to the country by Christian missionary monks, but it has never been proved that Highland farmers did not themselves discover how to distil spirits from their surplus barley.

The earliest historical reference to whisky comes much later, Mr J Marshall Robb, in his book ‘Scotch Whisky’, says: ‘The oldest reference to whisky occurs in the Scottish Exchequer Rolls for 1494, where there is an entry of ‘eight bolls of malt to Friar John Cor wherewith to make aquavitae’. A boll was an old Scottish measure of not more than six bushels. (One bushel is equivalent to 25.4 kiIograms)

When King James IV was in Inverness during September 1506, his Treasurer’s Accounts had entries for the 15th and 17th of the month respectively: ‘For aqua vite to the King. . .’ and ‘For ane flacat of aqua vite to the King. . .’. lt is probable that the aquavitae in this case was spirit for drinking.

The earliest reference to a distillery in the Acts of the Scottish Parliament appears to be in 1690, when mention is made of the famous Ferintosh distillery owned by Duncan Forbes of Culloden.

There is also a reference to distilling in a private house in the parish of Gamrie in Banffshire in 1614. This occurs in the Register of the Privy Council, where a man accused of the crime of breaking into a private house, combined with assault, was said to have knocked over some ‘aquavitie’.

One of the earliest references to ‘uiskie’ occurs in the funeral account of a Highland laird about 1618.

An unpublished letter of February 1622, written by Sir Duncan Campbell of Glenorchy to the Earl of Mar, reported that certain officers sent to Glenorchy by the King had been given the best entertainment that the season and the country allowed. It stated: ‘For they wantit not wine nor aquavite.’ This ‘aquavite’ was no doubt locally distilled whisky.

Another writer affirms that aquavitae occasionally formed part of the rent paid for Highland farms, at any rate in Perthshire, but no actual date is given for this practice.

What is the history of charging duty on Scotch Whisky?
The Scots Parliament in 1644 passed an Excise Act fixing the duty at 2/8d (13p) per pint of aquavitae or other strong liquor - the Scots pint being approximately one third of a gallon. For the remainder of the 17th century various alterations were made to the types and amounts of duty collected.

After the Union of the Parliaments in 1707, English revenue staff crossed the border to begin their lengthy attempts to bring whisky production under control. Ninety years later the excise laws were in such a hopeless state of confusion that no two distilleries were taxed at the same rate. Illicit distilling flourished, the smugglers seeing no good reason for paying for the privilege of making their native drink.

After a lengthy Royal Commission, the Act of 1823 sanctioned legal distilling at a duty of 2/3d (12p) per gallon for stills with a capacity of more than 40 gallons. There was a licence fee of £10 annually and no stills under the legal limit were allowed. The first distillery came into ‘official’ existence in the following year and thereafter many of the more far-sighted distillers came over on to the side of the law.

In 1840, the duty was 5d (2.5p) per bottle and by the beginning of the First World War it had risen to 1/81/2d (9p). In 1939, a typical bottle of Scotch Whisky cost 14/3d (72p) of which 9/71/2d (48p) was duty. By 1992, after a succession of duty increases, the same bottle was costing around £10.80. The duty on it was £5.55, equivalent to £19.81 per litre of pure alcohol.

In 1995, for the first time in one hundred years, the tax on Scotch Whisky was reduced. Duty fell from £5.77 to £5.54 a bottle (70cl). In 1996, the tax on Scotch Whisky was again reduced.

Since 1973 the price of a bottle of whisky, including the Excise Duty, has been subject to a Value Added Tax.

Scotch Whisky" The Water of Life

WHISKY - FAQ's II

What is patent still distillation?

Unlike Malt Whisky, Grain Whisky is distilled in a continuous operation in a Patent Still. This is sometimes known as the Coffey Still, after Aeneas Coffey, who developed it in 1831.

Steam is fed into the base of the analyser and hot wash into the top. As the two meet on the surface of the perforated plates, the wash boils and a mixture of alcohol vapours and uncondensed steam rises to the top of the column. The spent wash runs down and is led off from the base.

The hot vapours enter the rectifier at the base and as they rise through the chambers they partially condense on the sections of a long coil through which wash is flowing. The spirit vapour condenses at the top of the rectifier and is run off through a water-cooled condenser to the spirit safe and on to the spirit receiver. Once the spirit begins to be collected it runs continuously until the end of distillation.

Because of the rectifying element present in this process the distillate is generally lighter in aroma than most Malt Whiskies. It consequently has a milder character and requires less time to mature.

What is the worm?

The worm and its surrounding bath of cold running water, or worm-tub, form together the condenser unit of the Pot Still process of manufacture. The worm itself is a coiled copper tube of decreasing diameter attached by the lyne arm to the head of the Pot Still and kept continuously cold by running water. In it the vapours from the still condense. Fed by the still, it in turn feeds the receiving vessel with the condensed distillate.

The worm is being replaced gradually by the more modern tubular condenser.

What are low wines?

This is the name given to the product of the first distillation in the Pot Still process of manufacture. It is the distillate derived from the wash and contains all the alcohol and secondary constituents and some water. It forms the raw material of the second distillation, which is carried out in the Spirit Still. The feints and foreshots are added to the low wines when the Spirit Still is charged.

What is pot ale?

Pot ale, alternatively burnt ale, is the liquor left in the Wash Still after the first distillation in the Pot Still process. It is the residue of the wash after the extraction by distillation of the low wines.

What are foreshots?

Foreshots is the term applied to the first fraction of the distillate received during the distillation of the low wines in the Spirit Still used in the Pot Still process of manufacture. They form the first raw runnings of this second distillation and their collection is terminated by the judgement of the stillman. The following fraction of the distillate is the potable spirit. The foreshots are returned to the still, together with the feints.

What are feints?

Feints is the name given to the third fraction of the distillate received from the second distillation in the Pot Still process. They form the undesirable last runnings of the distillation. As noted above, they are returned with the foreshots to the Spirit Still when it is recharged with low wines.
The term is also applied to the first and last runnings from the Patent Still, in which process they are returned to the wash for re-distillation.

The feints and foreshots from the last distillation of the season are kept for adding to the first low wines of the succeeding season.

What are spent lees?

Spent lees are the residue in the Spirit Still after the distillation of the foreshots, potable spirits, and feints. They are usually treated and run to waste.

What is draff?

Draff is the spent grain left in the mash-tun after the liquor, wort, has been drawn off. It represents, as a rule, about 25 per cent of the malt and unmalted cereals, if any, put into the mash-tun. Draff enjoys a large market as cattle food. 

WHISKY - FAQ's I

What is a single whisky?

A single whisky is the product of one particular distillery.

What is meant by saccharify?

To saccharify means to convert to sugar. In whisky distilling it refers to the process which takes place during the malting and mash-tun stages by which enzymes in the malt, referred to as diastase, turn the starch in the cereals into sugar ready for the fermenting action of the yeast.

What is diastase?

When conditions of temperature and moisture favour germination, the embryo and associated parts of the barley grain secrete a mixture of enzymes commonly known as diastase. These act to modify and make soluble the starch in the barley, thus preparing it for conversion at a later stage to maltose.

What is wort?

Wort is the liquid drawn off the mash-tun in which the malted and unmalted cereals have been mashed with warm water. Wort contains all the sugars of the malt and certain secondary constituents. After cooling, it is passed to the fermenting vats. In Malt distilleries the cereals are all malted; in Grain distilleries a proportion only is malted, the remainder being unmalted. In some cases, Grain distilleries do not separate off wort, passing the complete mash to the fermentation vessels.

What is wash?

The wort or mash technically becomes wash as soon as yeast is added to start fermentation. However, the term is usually used to refer to the liquid at the end of the fermentation. It is the wash which forms the raw material of the first distillation in the Pot Still process and of the only distillation in the Patent Still process.

What is the pot still distillation?

Malt Whisky is distilled twice - although a few distilleries may undertake a third distillation - in Pot Stills which resemble huge copper kettles.

The spirit is driven off from the fermented liquid as a vapour and then condensed back to a liquid.

In the first distillation the fermented liquid, or wash, is put into the Wash Still, which is heated either directly by fire or by steam-heated coils.

At this stage the wash contains yeast, crude alcohol, some unfermentable matter and the by-products of fermentation. During the process of boiling the wash, changes take place in its constituents which are vital to the flavour and character of the whisky.

As the wash boils, vapours pass up the neck of the still and then pass through a water-cooled condenser or a worm, a coiled copper pipe of decreasing diameter enclosed in a water jacket through which cold water circulates.

This condenses the vapours and the resulting distillate, known as low wines, is collected for re-distilling. The liquor remaining in the Wash Still is known as pot ale or burnt ale and is usually treated and converted into distillers’ solubles for animal feed.

The low wines are distilled again in the Spirit Still, similar in appearance and construction to the Wash Still but smaller because the bulk of liquid to be dealt with is less. Three fractions are obtained from the distillation in the Spirit Still. The first is termed foreshots, the second constitutes the potable spirit, and the third is called feints. The foreshots and feints are returned to the process and redistilled in the Spirit Still with the succeeding charge of low wines. The residue in the still, called spent lees, is run to waste.

In the case of the Spirit Still, the design of the still, the height of the head (or top) of the still and the angle of the wide-diameter pipe or lyne arm, connecting the head to the condensing unit, are all very important and have an effect on the distillate.

The Pot Still has changed little in general design over the centuries.